Ukraine’s Central Bank Bans Purchasing Cryptocurrency using Local Currency

Amid the martial law enforced in Ukraine, the National Union Bank of Ukraine (NBU) has imposed several restrictions to prevent capital outflows. Recently, the NBU has banned cryptocurrency purchases with local currency. 

In an official statement by the Ukraine Central Bank on Thursday, several cross-border operations are restricted. Moreover, individuals are prohibited from purchasing cryptocurrencies such as Bitcoin using the national fiat currency, the Hryvnia (UAH).

The statement further mentions that Ukrainians can only purchase cryptocurrencies with foreign currencies. The total monthly limit is set to 100,000 UAH ($3,300) by the bank. This limit also applies to international peer-to-peer transactions.

The crypto purchases are tagged as “quasi cash transactions” by the NBU alongside several other transactions, including e-wallet deposits, travel expenses, and foreign exchange. These restrictions are adopted to prevent the “non-essential cash flow of capital” from the country amid martial law.

“These changes are necessary as they will ease the restrictions in the future and reduce the pressure on Ukraine’s foreign reserves. Moreover, it will also assist in improving the foreign exchange market for the country,” an NBU official wrote.

Due to Russia’s invasion and the ongoing martial law in the country, the need for international transactions has increased massively. As millions of citizens are forced to leave Ukraine, they have faced difficulties making international transactions. Thus, the NBU can’t afford unproductive transactions in such difficult times.

The NBU officials reported that the Ukrainian government had adopted several measures as part of the NBU resolution on April 2022. These measures came into force this Wednesday.

Several Ukrainian Banks have already adopted such measures. In March, one of the largest commercial banks in Ukraine, the PrivatBank, already restricted its customers from purchasing UAH and BTC. 

However, many eyebrows were raised by these restrictions as the Ukrainian government was working actively to legalize cryptocurrency amid martial law. In March, President Volodymyr Zelenskyy signed a law framework to establish a regulatory body for legalizing crypto in Ukraine.

Despite the ongoing conflict, Ukrainian crypto and blockchain survived

Following the conflict outbreak by Russia on February 24, 2022, many Ukrainian businesses have been shut down. Nevertheless, some cryptocurrencies managed to keep running. Many staff had to work in bomb shelters to keep the servers running.

Since the war began, the crypto exchange platform Currency.com has announced that it will no longer work for Russian users. Exmo, a London-based crypto exchange, also halted its business in Russia and Belarus, claiming that the Russian invasion made both countries “a very risky market.”